Thursday, September 30, 2010

The Tea Party that has gotten all the attention, the amorphous, self-generated protest against the growth in government and the deficit, is what I’d actually call the “Tea Kettle movement” — because all it’s doing is letting off steam.

That is not to say that the energy behind it is not authentic (it clearly is) or that it won’t be electorally impactful (it clearly might be). But affecting elections and affecting America’s future are two different things. Based on all I’ve heard from this movement, it feels to me like it’s all steam and no engine. It has no plan to restore America to greatness.

The Tea Kettle movement can’t have a positive impact on the country because it has both misdiagnosed America’s main problem and hasn’t even offered a credible solution for the problem it has identified. How can you take a movement seriously that says it wants to cut government spending by billions of dollars but won’t identify the specific defense programs, Social Security, Medicare or other services it’s ready to cut — let alone explain how this will make us more competitive and grow the economy?

and

The issues that upset the Tea Kettle movement — debt and bloated government — are actually symptoms of our real problem, not causes. They are symptoms of a country in a state of incremental decline and losing its competitive edge, because our politics has become just another form of sports entertainment, our Congress a forum for legalized bribery and our main lawmaking institutions divided by toxic partisanship to the point of paralysis.

The important Tea Party movement, which stretches from centrist Republicans to independents right through to centrist Democrats, understands this at a gut level and is looking for a leader with three characteristics. First, a patriot: a leader who is more interested in fighting for his country than his party. Second, a leader who persuades Americans that he or she actually has a plan not just to cut taxes or pump stimulus, but to do something much larger — to make America successful, thriving and respected again.

I'm completely with his analysis so far... Then he presents his diagnosis

Democratic Pollster Stan Greenberg told me that when he does focus groups today this is what he hears: “People think the country is in trouble and that countries like China have a strategy for success and we don’t. They will follow someone who convinces them that they have a plan to make America great again. That is what they want to hear. It cuts across Republicans and Democrats.”

To me, that is a plan that starts by asking: what is America’s core competency and strategic advantage, and how do we nurture it? Answer: It is our ability to attract, develop and unleash creative talent. That means men and women who invent, build and sell more goods and services that make people’s lives more productive, healthy, comfortable, secure and entertained than any other country.

He goes on to briefly share some ideas on what it would take to strengthen this "core competency" of innovation and creativity.

I have very mixed feelings here. On the one hand, I think he's absolutely right that this is America's core competency. On the other hand, there's a sense in which what he proposes is doubling down on the strategy that got us into trouble in the first place. It's not like our current problems are because we stopped innovating - just look at the patent stats - or stopped working our asses off. No, our current problems are precisely the unpleasant side effects of prior innovation. Americans invented assembly-line auto-production, and now we're struggling with needing more oil for the resulting cars than is easily available. Americans invented the internet, and now we're struggling with competition from low cost workers overseas competing via that same Internet. Americans invented industrial robotics, and shipping containerization, and now we're struggling with declining manufacturing employment as workers must compete with both machines and globally sourced production.

So Friedman's diagnosis amounts to a Red Queen situation. We are not running hard enough to stay in the same place, so we should run faster. Damned if we do, and damned if we don't, as far as I can see at the present.

5 comments:

I guess my view of the Teabaggers is this. Those of us in the U.S. have gotten used to a fairly comfortable lifestyle. For most of us food availability isn't a problem, we have a wide range of consumer gadgets that we buy just because we are bored, and we can drive or fly all over the place just for the fun of it.

But ultimately people are getting squeezed. Wage growth has been anemic for decades, but the prices we pay for things keeps going up. To some extent people "benefit" from being able to buy cheaper crap at WalMart, but for things like housing, cars and food the trend has been upwards. This financial squeeze makes people uncomfortable - they sense that their world and all of the consumer goodness that they have accumulated is being threatened. The Republicans have convinced them that the reasons for the financial squeeze is simply high taxes, and many of them are buying into it. I suppose it is an easy sell - it would be harder to convince people that the problem is anemic wage growth as they are worried enough as it is about their jobs being exported to China.

There is one important area where China does have a plan which we should learn from. That is stimulus spending. They did alot, and it helped their economy enormously. We are facing deflation and unemployment on the other hand, not having done enough.

This is the key aspect that Friedman doesn't get. Our deficits aren't important- if inflation is good, then the deficit is good, no matter how high, since it represents the savings of us and of foreigners in dollars. (Japan has three times our deficit and is doing just fine- no danger of default, etc.) Right now, we need more spending, deficit or no. Later on, if inflation ever became a problem, then we can worry about it.

On the theme of the effects of productivity-enhancing innovation and creativity, a story about data-mining and forecasting: 'Pre-crime' comes to HR

" HR professionals wear many hats, and one of them is crystal ball reader.

All hiring and promotion, and some firing, are based on predictions about the future. They take available data (resumes, interviews, references, background checks, etc.) and advise hiring managers on what kind of asset a person will be in the future. Will they interact well with other employees? Will they be a good manager? Will they keep company secrets? Will they show up on time?

...

When the software decides that you're going to quit, steal company secrets, break the law, post something indecent on a social network or lie on your expense report, the supervising manager will be notified and action will be taken -- before you make the predicted transgression.

...

You can be passed over for hiring or promotion based on what kind of person you are or what they think you might do in the future. You don't have to actually violate company rules, and they don't have to prove it.

... the company merely has to weigh the risk [of action] ... against the risk of your predicted future behavior.

...

The practice of using available data to predict the future has always been a big part of HR. But now and increasingly, the tools are becoming monstrously sophisticated, efficient, powerful, far-reaching and invasive. "

I can't see this helping social harmony, somehow. On the other hand, perhaps it's just creating a new industry in identity, uh, management.

The U.S. financial system is a fractional reserve system - money must be lent into existence. I believe it was Mike Shedlock that coined the term "Peak Credit", and the permutations of events stemming from that circumstance are rather numerous and problematic.

Every debt is an asset on someone else's balance sheet. As debts are paid down or defaulted upon (the definition of "Peak Credit"), wealth (debt) in financial form is destroyed.

For societies, core competencies also come with core incompetencies... the tax burden placed upon the worker to support the elderly... wasteful programs (broken window fallacy)... the uniquely American incompetency to produce more criminals, miscreants, and gold-bricks (prison population, false disability claims, workers refusing jobs in Agriculture while collecting unemployment...)

Given peak credit, we might be best working to correct our incompetencies rather than improve our core competencies. At least somewhat.

I wrote a long comment, but I think it got swallowed. Well, to make it short, I think energy and environmental issues mean that the pie will shrink from here on out, so even if everything went well Friedman's new, strong USA cannot happen.

That said, even with infinite resources, the economy is sliding back into the historical norm of a small elite and a large peasantry. Income inequality can't and won't be dealt with because the American Dream has gone from an idea of security to the dream of striking it rich. The tea party plays on people's idea that government elites are preventing them from being rich, when in reality the barriers are expensive education, rising housing costs, and unstable and unlucrative employment at companies that pay the top insane sums and the bottom the absolute minimum (just like in history, whether serfs, slaves, or free workers).

Ultimately, an egalitarian society depends on the willingness to share resources, and inevitably can't last forever before the top starts protecting it's own gains and advertently or inadvertently becomes an aristocracy (as wealth and power are two sides of the same coin).

We need a new definition of a good life. Health, reasonable housing, a decent amount of leisure, and good nutrition can be achieved, and even achieved in a low energy, low impact way, but it's fundamentally incompatible with having the lifestyle of the megarich. Americans currently prefer the fantasy of being megarich.

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I'm a scientist and innovator in the technology industry, with a broad range of interests and experiences. I have a Physics PhD, MS in CS, and have done research, lived in cohousing communities, run a business, and designed technology products. Professionally, I have mainly worked on computer security problems. Currently I'm Adjunct Professor of Computer Science at Cornell, but this blog represents my views only.
Email me at stuart -- at -- earlywarn -- dot -- org. I do read all email, but because the blog is a part-time unfunded enterprise, I often fail to reply due to lack of time - apologies.